Wednesday, July 14, 2010

Free personal care saves money - axe top salaries instead.

So who pays? What gets cut? Well, hardly a day seems to go by without a story in the press claiming that the cost of free personal care for the elderly is “out of control” and “unsustainable” . There are repeated calls to axe near-free prescription charges; to restore the graduate endowment and bridge tolls. Let’s end free bus passes; shut swimming pools and libraries. Museums - who needs ‘em? Clearly, everything has to be looked at. But there’s a real danger that we start from the wrong end, axing relatively cost-effective front line services rather than cutting administration. That is where the real savings are to be made ina public sector which is highly labour intensive. Great damage could be done to the quality of peoples’ lives, and the dignity of vulnerable groups, by slashing services that don’t actually cost very much while protecting the public sector bureaucracy.

I find it slightly offensive to be talking about cutting elderly care when there are NHS managers earning over £100,000 a year and quango-crats receiving a total of £37m in bonuses. Richard Ackroyd the Chief Executive of Scottish Water was handed a £105,000 bonus on top of his £236,000 salary last year. Why target prescription charges for the chronic sick when there is manifest duplication and inefficiency across Scotland's 32 local authorities? When more than half of the council tax raised in councils like Dundee goes goes to pay pensions of former staff. Why do police officers retire at at 51 with index-linked pensions of two thirds salary almost equal to the national median wage? It's a complete mystery to me and an anachronism at a time of financial crisis. So is the arbitrary ring-fencing of NHS costs and giving jobs-for=life guarantees to public employees.

I say this not as someone who has an ideological aversion to public spending - far from it. Strong public services are the foundation of a civilised society and an efficient economy. Public sector workers are among the mose able and dedicated in the country. Scotland’s strong civic ethos can only be maintained by a properly resourced public sector. But I’m afraid the issue is one of simple arithmetic. The Scottish Executive budget has doubled in ten years to over £30 billion. The major increases are in staffing costs across the NHS, quangos, civil service and councils. To make real cuts in public spending, rather than token headline-grabbers, this is where you have to start.

Yet ask almost anyone in geriatric medicine and they’ll say that free personal care is a humane and effective policy that helps older people remain independent and self-sufficient. In the years before the policy was introduced, up to one in eight beds in NHS wards was “blocked” by an older person for over six weeks because they had nowhere to go. The most recent bed blocking figure is zero. Free personal care costs around £279m a year which sounds a lot, but is a drop in the bucket of public spending in Scotland. And remember, the cost would have been considerably less had the former work and pensions secretary, Alistair Darling, not refused to recycle attendance allowances which predated FPC. Respect? Means testing this benefit, or getting rid of it altogether, will appeal to sections of the press and to the more primitive parts of the Labour party in Scotland, but it will make little difference to the overall spending picture and cause distress and indignity to 50,000 older people.

As for free prescription charges, you could easily lose the cost of this policy - £57m - in the margin for error in calculating the NHS budget. In a health spend of £11bn, it is almost too small to measure. The total drugs bill for the Scottish health service is approaching £1bn, but this has little to do with free prescriptions and a lot to do with the increasing cost of hospital medicines. Bus passes for the elderly is another false economy. Most older people only go on the buses because they are free, so charging will raise very little. Restoring the graduate endowment - university tuition fees by another name - would deliver maybe £19m.

These are the kinds of petty savings that diminishes us as a society. But it is tempting for politicians to target them precisely because they are high profile. They’re the items that appear in every newspaper article about cutting the deficit. The alternative: achieving efficiency savings and stripping out staff costs and overheads is much more difficult because it is largely invisible and involves taking on a very powerful interest group: the public sector bureaucracy. There is surely no one even in the public sector who believes that after a decade of unprecedented expansion there aren't significant savings that can be made.

Then there is pay. The other big debate in Scottish government circles is whether or not to follow England’s line of freezing pay for two years for public employees earning over £21,000 Or should the Scottish government allow a modest increase, maybe 1%, to secure the votes of Scotland’s 600,000 state employees at the next Holyrood election? Well, I think it would be a mistake to start cutting services but to increase pay at at time like this. Public sector employees have done very well throughout the crisis, with their pay continuing to rise while private sector pay has been trashed. What message would it send out if pay were to be prioritised over services to the elderly? The danger is that we could end up with a Rolls Royce pubic service which no longer actually provides any meaningful services to the people who pay for it. Scrap the bonuses, freeze pay, cut the fat. I'm sorry, but it's the only way to balance the books.

3 comments:

Anonymous
said...

Why do people in quangos need bonuses at all? By and large they are very well paid for very little work. Most of them have a main job and the quango role gives them an extra income.I reckon scrapping all bonuses to quangos is not an unreasonable move in the current climate.

About Me

Iain Macwhirter is the award-winning political columnist for the Herald and Sunday Herald. He has been a political broadcaster for over 20 years, in Westminster and Holyrood, and is former Rector of Edinburgh University.